Mark Cuban: US hospitals 'don't know their costs'
Mark Cuban: Why US hospitals "don't know their costs"
Mark Cuban argues that the fundamental problem in U.S. healthcare is not public versus private ownership but that hospitals lack granular cost data, relying on broad accounting methods instead of actual product-level costs. He criticizes Medicare cost reports and cost-to-charge ratios, saying they don't reveal the true cost of procedures like hip replacements. Cuban advocates for transparency in contracts and pricing, and he's applying his philosophy through Cost Plus Drugs and Cost Plus Wellness, which publish contracts and connect employers directly with providers.
The fundamental issue is transparency and trust … [and] there are a lot of hospitals that don’t know their costs.
- gumby
Clay Christiansen (the “The Innovator‘s Dilemma”/disruption guy) once pointed out to me that hospitals were subject to the same disruptive pressure that kills successful companies.
He gave an example (this was 25 years ago) of heart attacks: people used to get bypasses that needed an entire operating team and weeks of hospitalization. But then angioplasty and stents were invented, a treatment you could get and be home the same day, and that could even be done in outside clinics. But while they handled most cases, the hospital still got the rare but super serious ones. So they had these big expensive facilities and staff but not enough “business” to support it. Just like the steel minimill they lost their cost structure but couldn’t see it as it was happening.
- bluGill
Just be careful. While hospitals need to do better, a large part of what I want from a hospital is to be over prepared. Just in time is good, for a lot of things, but there needs to be a large buffer of things in inventory at a hospital just in case there is a large disaster. (this is hard - blood expires and people don't like to hear about their donation being wasted even though wasted blood means no doctor had to decide which person didn't get blood for lack of supply)
- MattCruikshank
> they don’t know what a bill of materials is for a hip replacement. Rather than identifying the actual labor, supplies, implants, overhead and other expenses tied to an individual procedure...
How often is there a malpractice case for a hip replacement?
I'm willing to bet that the costs of a malpractice case can be one, two, three, or even more orders of magnitude higher than all of those other expenses. Dwarfing any of those enumerated costs. Even cases that they win.
Of course they're looking at the statistics rather than counting beans.
- goda90
> Mr. Cuban argued hospitals often rely on broader accounting methodologies that spread costs across services.
Maybe they do this intentionally to avoid insurance refusing to pay for the most expensive but potentially necessary services.
- inanutshellus
Reminds me of the Surgery Center of Oklahoma which cause such a huge news buzz back in 2009ish for publishing packaged pricing. Brilliant move. (And they still do it!)